Merlin, A2IM and Koch along with some in the independent music community have complained loudly that the deal offered by MySpace Music doesn't give them the same equity stake as the major labels. "Any independent deal struck without an equity component (as was done with the majors), will see independent labels face a situation whereby their major competitors will profit from the use of their repertoire without an appropriate upside opportunity being extended to them," states Merlin CEO Charles Caldas.
But The Orchard, one of digital music's biggest aggregators, was happy to sign. "I see MySpace Music's short and medium term potential to provide revenue to artists and labels for doing what they already do: engage their fans on MySpace," Orchard CEO Greg Scholl told Hypebot.
"We were concerned with aggressively negotiating the highest rate possible." he continued. "I see all of this talk about equity as a bit of a red herring. What is equity worth when it can be diluted by new stock offerings and other financial maneuvers? We should be concerned with arguing for a share of the profits" if, for example, there were an asset sale.
The deal that The Orchard signed is "not particularly long term"...
and Scholl says he'll continue to advocate for profit sharing. "I believe that over time MySpace and its major label partners will see how much more engaged indie artists and fans are and how valuable having them spend time on MySpace (rather than a competing service) is."
Until then, Scholl is happy to deliver a new revenue stream to The Orchard's artists and labels; though he's not sure it will come from download sales. "Having an Amazon buy button there is nice, but I'm not sure people go to a social networking site to buy. They go to listen and interact." It's also a great environment for advertisers and now The Orchard's clients get a share of the money those ads generate.